The FTSE 100 closed up 66.08 points at 7438.84, making the biggest gains among the major European indices after the Catalan referendum yesterday.

Germany's DAX rose 73.8 points to 12,902.7 while France's CAC 40 was up 20.6 points at 5,350.4 and Spain's IBEX 35 fell 1.2 per cent or 125.8 points to 10,255.7. The US Dow Jones was ahead 79.2 points at 22,484.3 in early trading.

Brent crude was at $55.77 a barrel and the pound was at $1.33 against the dollar and €1.13 versus the euro.

London's top index was supported by airline stocks including easyJet - which topped the FTSE 100 after rising 63p to 1,280p - as the collapse of Monarch Airlines was seen as a boon for the failed carrier's rivals. IAG shares also jumped 14p to 607.5p.

Home builders - including Barratt Developments which rose 26p to 640.5p, and Persimmon which climbed 108p to 2,690p - were close behind as investors celebrated Government plans to expand its Help to Buy scheme by £10billion.

Hiscox shares rose 17p to 1,297p. The company laid bare the impact of hurricanes Harvey and Irma, revealing the natural disasters will cost the firm approximately $225million (£168million) in claims.

Time Out Group shares edged higher by 0.5p to 144.5p after the group announced it had signed a lease that will bring its popular food market to Boston.

Stanley Gibbons shares tumbled 1.5p to 7.88p after the stamp and coin specialist reported trading losses of £8.8million in the year to March, and confirmed that it was in default on its loans and is now 'dependent on the bank's ongoing support'.

The biggest risers on the FTSE 100 were easyJet up 63p to 1,280p, Barratt Developments up 26p to 640.5p, Persimmon up 108p to 2,690p, and Centrica up 6p at 193p.

The biggest fallers on the FTSE 100 were Mediclinic International down 7p to 643p, CRH down 26p at 2,811p, ITV down 1.4p to 173.3p, and Paddy Power Betfair down 55p to 7,355p.

17:45

City pundit on today's session

David Madden, market analyst at CMC Markets, said: 'The Spanish stock market is suffering after the violent images and footage that were broadcasted around the world yesterday of the Catalonian independence referendum.

'The use of force by police officers shocked viewers around the globe, and the heightened tensions in the region have prompted investors to cash in their positions.

'Opinion polls in advance of the referendum suggested that the pro-independence side were in a minority, but I suspect Madrid’s actions will drive up calls for independence. The political uncertainty is weighing on their stock market, and until the situation is solved, traders will be wary.

'Shares in easyJet are up 5.1 per cent today as the collapse of Monarch airlines makes the airline more attractive. The cancellation of thousands of flights by Ryanair recently was already helping easyJet’s share price as the Irish company endured damage to its reputation.

'EasyJet’s stock hit its highest level in over five weeks, and if positive momentum continues, it could target the August high of 1373p.

'Barclay’s and Lloyds are lower on the day after the Bank of England stated that banks headquartered in the UK must find a net £4billion in order to comply with the new regulations. Banks will have to obey the new rules by 2022, and its aim is to make the UK banking system more secure.'

'US equity markets are still in their bullish form as the Dow Jones and S&P 500 set fresh record highs and the NASDAQ 100 is edging towards its existing all-time high.

'Optimism surrounding Donald Trump’s tax proposals is still doing the rounds, and even though Mr Trump failed to introduce his reforms to healthcare, dealers are more optimistic about the tax cuts being brought in.'

17:17

FTSE 100 closes up 66.08 points at 7438.84

16:14

'Robo-advice' firm Nutmeg see losses widen

Its accounts with Companies House published today reveaedl that pre-tax losses went up from £8.9million to £9.3million in 2016 as operating expenses increased by nearly £1.2million to £11.9million.

However, revenues rose from £1.7million to £2.5million and chief executive Martin Stead, who took the helm in May last year and appointed a new executive team, said the firm has grown ‘significantly’.

The online investment management service also said it may need to raise more cash to continue its expansion.

With only half an hour left to trade, the FTSE 100 is up 0.75% to 7,428

14:18

Market recap: housebuilders and airlines soar

Shares in housebuilders have risen sharply this morning thanks to Theresa May’s latest promise to boost the Help to Buy scheme by £10billion. Full details are expected in the Budget, but the market is already anticipating further support for the housebuilding sector.

Persimmon and Barratt are 3.6 per cent higher and Taylor Wimpey is 1.6 per cent up.

Meanwhile airlines and travel companies are also doing quite well today, as the market considers who is going to profit from the demise of Monarch Airlines.

easyJet seems to be the market’s best tip - up 4 per cent, with Wizz Air up 3.7 per cent and British Airways owner IAG also up 1.6 per cent.

The government is going to pull out all the stops to keep the wheels of the housing market turning, and housebuilding companies stand to be a key beneficiary.

Shares in these companies were hit hard by the cloud of economic uncertainty kicked up by the EU referendum last year, but have since recovered thanks to some pretty brisk business performance.

Help to Buy is just one of the tailwinds filling the sails of the housebuilding sector, with low interest rates and a significant lack of supply in the housing market also helping to boost profits. These trends are likely to continue for the foreseeable future, and while interest rates may tick up soon, the Bank of England isn’t going to increase rates sharply. For the time being, the housebuilders look to be sitting pretty.

Meanwhile airline and travel companies have seen their shares rise as the market mulls who will be the beneficiaries of Monarch’s demise. With 300,000 bookings cancelled, there will be a lot of people out there looking for a new provider to help them get away on holiday.

14:05

UK based banks told to hold extra £4bn to avoid another round of bailouts

Banks headquartered in the UK they will need to find an extra £4billion to help protect British taxpayers from being forced to fund another round of bailouts.

Estimates released by the Bank of England show an industry-wide shortfall in the amount that banks, building societies and investment firms need to hold in order to meet new guidelines known as the minimum requirement for eligible liabilities and own funds (MREL), set to come into force in 2022.

MREL forces banks to hold enough money to absorb losses, which could be drawn down in the face of collapse to finance an orderly wind-down.

Firms will be required to restructure a total of £116billion worth of existing debt, but are currently facing a net shortfall of £4billion in order to meet the new regulations.

13:56

The FTSE 100 was up 40.76 points at 7,413.52

12:14

UK manufacturing firms see costs hit a six-month high

Manufacturers look set for a squeeze on margins as they face increased costs pressure due to a mix of the weakened pound, rising commodities prices and increased supply-chain pressures.

New orders and production kept rising as domestic and overseas demand remained ‘solid’, but were impacted by rising costs for raw materials and imported goods, which hit a six-month high in September.

The latest Markit/CIPS UK purchasing managers' index for the UK manufacturing sector slipped to 55.9 last month, down from a four-month high of 56.7 in August. A reading above 50 indicates growth.

Insurer Hiscox has revealed recent hurricanes Harvey and Irma will cost the firm approximately £168 million in payouts.

The FTSE 250 firm said the estimate was within the modelled range for a disaster of that scale and was based on an insured market loss of $35bn for Hurricane Irma and $25bn for Hurricane Harvey.

Chief executive Bronek Masojada said the natural disasters are already having an impact on insurance rates.

‘Paying claims from devastating events like these is precisely what we are here for,’ he said. ‘Our focus is to get our customers back on their feet as quickly as we can.’

‘These events are already having an impact on rates in the global insurance market, particularly in affected areas and specific sectors.’

10:55

FTSE steaming along

The blue chip index is now back well above 7400. It has risen 0.62% to 7418, to be exact.

10:33

Fresh manufacturing PMI data is out

Duncan Johnston, UK manufacturing industry leader at Deloitte -

“The PMI figure for the UK manufacturing sector slipped to 55.9 today – down from 56.7 in August. It has remained above the 50 mark, which indicates expansion in the sector, for 14 consecutive months.

“Today’s data is broadly consistent with last week’s CBI monthly Industrial Trends Survey which saw the factory order book balance fall to +7, the lowest value since April. However, overall sentiment in the industry is positive, with greater output reported due to an increase in new business. This has come from both domestic and overseas demand.

“The continued optimism reported in industry surveys will be positive news for the sector. However, the manufacturing economic output results for Q3, due later this month in the Preliminary GDP estimate, will reveal more about the health of the sector which saw a decline in output in Q2. This will depend on factors such as actual fulfilment and value of orders, as well as cost pressures faced by businesses.”

10:05

Stanley Gibbons 'dependent on bank support' as annual losses double

Losses at the world’s oldest stamp business more than doubled last year as it admitted that its future lies in the hands of the bank lending it money.

The 162-year old company, which is known for stamps but it also deals in coins, antiques and fine wine, posted trading losses of £8.8million in the year to March, up from £3.9million the previous year.

It said this was a result of a decline in trading in all divisions, particularly investments and its rare coins business AH Baldwin. Revenues also fell from £59.1million to £42.5million.

'Although equity markets are marginally higher, this is more a response to currency moves rather than fundamental investor confidence, with a stronger dollar helping the FTSE 100 start the week up, while a weakening Euro is supporting European equities, despite issues in Catalonia.'

'Kevin Warsh may not be a name that many have heard of, but he is potentially about to be one of the most powerful men in the market, as the possibility grows that he may become the next Chair of the Federal Reserve.'

'Mr Warsh is perceived as a hawk, whereas Janet Yellen has been hugely dovish over her tenure, so this alone has seen bond yields and the dollar rise as investors contemplate a shift in direction. Equity markets have been cosseted by global central banks since the financial crisis so the Fed Chair appointment is pivotal. There are other candidates still in the mix, so equity markets have not yet responded in any meaningful way, but shifting the dynamic towards higher rates and faster tapering could become a major negative for markets if Mr Warsh is confirmed.'

'Usually what’s bad for one airline – higher fuel costs, terror attacks, air traffic control strikes – are bad for the sector. Shares in the various players have a tendency to track each other with some consistency.

But the failure of Monarch is good news for rivals. Shares in Ryanair and EasyJet both rose about 3% in early trading as the market reacted to the news of the demise of Monarch after 50 years in business. IAG and Lufthansa were both about 2% higher.

No doubt this takes the heat off Ryanair but it has wider implications. The third airline failure this year in Europe, after Alitalia and Air Berlin, is a symptom of over-capacity and overly-aggressive pricing.

It means fewer seats to fill sector-wide – more than 6m in the case of Monarch. This should mean Ryanair and EasyJet can comfortably improve load factors, even if the reputation of the former has suffered of late. This should be positive for margins despite pricing pressures.

There are now only really five big carriers operating in Europe: Ryanair, Lufthansa Group, International Airlines Group, Air France-KLM, and EasyJet. Many more mid-sized carriers are limping on thanks to cheap oil but further consolidation may be necessary. Ryanair is among the last standing – its reputation can take a few more knocks.'